Introduction to our forecasting

Welcome to the methodology for the Modo GB Forecast.

A radically different battery revenue forecast

  • Built in-house: our entirely new model, built from the ground up, gives a fresh view of future revenues for battery energy storage.
  • Data-driven for storage: we use our industry-leading view of today to model storage for tomorrow and beyond, providing a data point per half-hour to 2050.
  • Transparent: inputs are based on ESO's Future Energy Scenarios (Consumer Transformation) blended with the Modo view. Details on these scenarios, our model, and method are presented here.
  • Fixed generation capacities: rather than allowing them to vary within the model, we fix the buildout capacities (GW) of gas / solar / wind / storage, etc., and check the results are 'sensible'. This means we can model potential scenarios such as '10% more solar', and that there aren't infinite grid connections for new build generation to use. The world isn't perfectly economical!

What does 'sensible' mean?

  1. The consumer must face a realistic price for wholesale power.
  2. There cannot be an expectation for extensive periods with loss of load, e.g., 3h+ per year, where electricity supply doesn't meet demand. This is in line with ESO expectations.
  3. No technology should have an Internal Rate of Return (IRR*) that far exceeds the cost of capital.
  4. No technology that continues to be built can be loss-making or uninvestable where the IRR* is far below the cost of capital.
  5. Power prices should decline with wind & solar growth.
  6. Minimum prices will find a floor at £0/MWh as subsidy regimes expire.

The model consists of three parts

This guide goes into some detail on each part. Use the sidebar or search (command + K) to navigate to the details you're interested in.

* Our IRR calculations are based on CapEx and OpEx numbers sourced from NREL where possible. For technologies where these numbers could not be sourced from NREL, alternative reputable sources were used instead, such as the IEA.

What’s Next

Check out the inputs to the model in more detail.